Wealth and Income inequality in the U.K.

Official statistics suggest that the richest 20% of the U.K. are 100 times wealthier than the poorest 20%; the richest fifth’s annual household income is 5 times greater than the poorest 20% of the U.K. Population, after benefit and taxes are taken into account.

This post provides two accessible ‘headline’ statistics on wealth and income inequality, courtesy of some excellent animated infographics, and then goes on to look at the original data sources and organisations who produce the data in more depth. The point of this post is to both provide and overview of wealth and income inequality in the United Kingdom and to provide some useful links to allow students to explore statistics on wealth and income inequalities in more depth.

Wealth and income inequalities are closely correlated with social class, although economic measurements are just one indicator of social class, which is a broader concept, also encompassing social and cultural capital (if we are going to use the latest social class survey – see here for an introduction to the concept of social class.

Wealth Inequality in the United Kingdom

The richest 20% are about 100 times richer than the poorest 20% –

If we represent the wealth of nation as £100 pounds, then the richest 20% have £60 out of every hundred, while the bottom 20% have only 60 pence.

The inequality briefing below provides an overview of how wealth is distributed in the UK. It compares how people think wealth should be distributed, what they think the actual wealth distribution is in the UK, and finally what the actual wealth distribution is.

What people think wealth distribution in the UK should be

How people think wealth is actually distributed in the UK

How wealth is actually distributed in the UK

Income Inequality in the U.K.

The bosses of Britain’s biggest companies earn 100 times more than the average wage.

It takes them just three days to earn what a Nurse earns in an entire year.

This video by the High Pay Centre summarises the situation in 2014

Brenda, nurse, earns £12 an hour, the average wage in the U.K.

Brian, a chief executive of one of Britain’s biggest companies, earns £1200 an hour, 100 times what Brenda earns.

It takes Brian just three months to earn what Brenda will earn in her entire working life.

Brenda’s annual salary of £27 000 has hardly changed at all over the last decade, while the cost of living has increased.

Brian’s annual salary on the other hand has increased from 2.6 million to 4.3 million over the last decade.

If we redistributed the income of the U.K. on the same basis of the Netherlands, which would effectively involve reducing the income of the top 1% by a mere 25%, then 99% of us would be an average of £3000/ year better off.

Income inequality in the UK 2014

Income inequality U.K. 2014

A fairer income distribution, based on the Netherlands

A fairer income distribution, based on the Netherlands

Further Sources on Wealth and Income Inequalities

The sources below provide a more in-depth focus on the nature and extent of wealth and income inequalities in the United Kingdom today. Click on the links to explore them further!

Source 1 – The Office for National Statistics bi-annual ‘Wealth in Great Britain’ Survey

Source 2 – The Office for National Statistics produces an annual report on ‘Household disposable income and inequality in the UK’

Original household income (before cash benefits and direct taxes) for the richest fifth of households was around 12 times higher than the poorest fifth (£85,000 and £7,000 per year respectively)

Disposable household income (after cash benefits and direct taxes) for the richest fifth was 5 times higher than the poorest fifth (£62,400 and £12,500 per year respectively).

This shows us that, overall, cash benefits and direct taxes led to income being shared more equally between households

Over the past year, median disposable income for the poorest fifth of households rose by £700 (5.1%). In contrast the income of the richest fifth of households fell by £1,000 (1.9%) over the same period.

Looked at over the past decade, the incomes of the poorest fifth of households have increased by approximately 13%, while the incomes of richest fifth of households have fallen by approximately 3%.